CRT v Andy Wingfield Update

[GUMPY]

I wouldn't think there's much need for me to bother, . . . not when you consider the large number of river boaters who have been paying over the odds for their River Registrations [PBC's] and are now entitled to a refund of all the VAT they've ever paid on them.

Needs someone to kick it off though, you would be the ideal person Tone.

[waterworks]

Oops.

Edited February 23, 2016 by waterworks

[Tony Dunkley]

 

That was a quote straight from the press release so BW's words not mine.

 

My words now: Irrespective what you call it if CRT is entitled to make a charge then why does anyone think it can be without VAT? Quoting the example of the EA is a complete red herring as they have this special status which BW/CRT do not.

 

 

Simply, because the item they're charging VAT on at the standard rate of 20% is ZERO RATED, as C&RT well know. Quote from C&RT internal E-mail dated 4 September 2012 :~ "The EA does not charge VAT because a 'registration' is zero rated. A boat Licence is standard rated . . ."

 

The BW briefing note you reproduced in your post #1082 is utter tripe from beginning to end, but there are four paragraphs in particular that demonstrate the totally flawed basis upon which BW claim to have taken the decision to charge VAT on Licences, and what they too were 'passing off ' as Licences : ~

 

"Prior to 1989 BW did not charge VAT on its craft licences and as a

result was unable to recover VAT on its general repairs and maintenance

of the canals."

and : ~

"In 1989 BW decided to charge VAT on its property, including canals, so

that it could generate taxable activities (including charging VAT on

the craft licence) on the canals, which in turn allows BW to recover

the VAT incurred on general maintenance and refurbishment. This is a

considerable sum of money which is reinvested in the waterways."

and :~

"If BW didn't charge VAT on the craft licence, at today's level of

expenditure on the canal network, BW would be losing up to £20 million

per annum in VAT on the general and major repairs, and the price of the

craft licence and other services would need to be increased

significantly to offset this loss."

and :~

"The Environment Agency has a special status within the VAT legislation

that allows it to reclaim VAT charged on work carried out on its

waterways. Our request to HM Treasury for BW to have the same status

was rejected."

 

This nothing but pack of lies, and utter nonsense.

If any company or organisation which is VAT registered pays out more in VAT to it's suppliers than it collects in VAT from it's customers then it simply reclaims the difference back.

The only circumstances under which BW, C&RT or the EA would not be able to do so would be if their annual turnover was below the VAT registration threshold and they did not VAT register voluntarily.

[Graham Davis]

 

HMRC will only continue to be 'happy with the situation' until they realize that they are being deceived just as much as the river boaters who are sold these phony 'Licences' by C&RT. They [HMRC] have so far accepted C&RT's description of what they're collecting standard rate VAT on at face value, and because boat Licences do attract VAT at standard rate it will appear to HMRC that nothing is amiss.

 

It's really quite a clever piece of circular and self perpetuating deception on C&RT's part. First they misrepresent a PBC [Registration] as a Licence, then, with the appearance of doing things correctly, they add VAT to the phony 'Licence' fee. All in all, a tidy and quite convincing false trail with PBC's well documented, in HMRC's records in addition their own, as being 'Licences', . . . which of course, they are not.

 

 

 

I wouldn't think there's much need for me to bother, . . . not when you consider the large number of river boaters who have been paying over the odds for their River Registrations [PBC's] and are now entitled to a refund of all the VAT they've ever paid on them.

 

So you are happy to criticise and make accusations of illegality but actually aren't willing to do anything about it?

Typical, all mouth and trousers!!

 

Can you explain , if a registration certificate is being sold as a licence why you feel it is right and correct

 

Not my job.

Take it up with HMRC.

[gaggle]

Can you explain , if a registration certificate is being sold as a licence why you feel it is right and correct

 

You say it is not your job to explain why YOU feel it is right and correct for the misrepresentation to have been made and continues to happen , how would HMRC know what goes on in your head to provide any insight into your thinking.

 

[mayalld]

 

Simply, because the item they're charging VAT on at the standard rate of 20% is ZERO RATED, as C&RT well know. Quote from C&RT internal E-mail dated 4 September 2012 :~ "The EA does not charge VAT because a 'registration' is zero rated. A boat Licence is standard rated . . ."

 

The BW briefing note you reproduced in your post #1082 is utter tripe from beginning to end, but there are four paragraphs in particular that demonstrate the totally flawed basis upon which BW claim to have taken the decision to charge VAT on Licences, and what they too were 'passing off ' as Licences : ~

 

"Prior to 1989 BW did not charge VAT on its craft licences and as a

result was unable to recover VAT on its general repairs and maintenance

of the canals."

and : ~

"In 1989 BW decided to charge VAT on its property, including canals, so

that it could generate taxable activities (including charging VAT on

the craft licence) on the canals, which in turn allows BW to recover

the VAT incurred on general maintenance and refurbishment. This is a

considerable sum of money which is reinvested in the waterways."

and :~

"If BW didn't charge VAT on the craft licence, at today's level of

expenditure on the canal network, BW would be losing up to £20 million

per annum in VAT on the general and major repairs, and the price of the

craft licence and other services would need to be increased

significantly to offset this loss."

and :~

"The Environment Agency has a special status within the VAT legislation

that allows it to reclaim VAT charged on work carried out on its

waterways. Our request to HM Treasury for BW to have the same status

was rejected."

 

This nothing but pack of lies, and utter nonsense.

If any company or organisation which is VAT registered pays out more in VAT to it's suppliers than it collects in VAT from it's customers then it simply reclaims the difference back.

The only circumstances under which BW, C&RT or the EA would not be able to do so would be if their annual turnover was below the VAT registration threshold and they did not VAT register voluntarily.

 

Until you understand the difference between zero rated and exempt, explaining this will be impossible.

 

If you opt to have licences exempt from VAT, you cannot reclaim input tax.

 

If licences were zero rated, you could reclaim.

 

The current position;

 

1) is revenue positive for CRT

2) Makes no difference to what a boater pays

3) Assists hire companies.

[Alan de Enfield]

 

Until you understand the difference between zero rated and exempt, explaining this will be impossible.

 

If you opt to have licences exempt from VAT, you cannot reclaim input tax.

 

If licences were zero rated, you could reclaim.

 

The current position;

 

1) is revenue positive for CRT

2) Makes no difference to what a boater pays

3) Assists hire companies.

 

Maybe there is some misunderstanding :

 

1) There is no question that licences are subject to VAT

2) C&RT can reclaim their VAT

3) Certificates of registration are not subject to VAT

4) Irrespective of Certificates of registration being exempt or zero rated, because of the vast majority of 'licences' being subject to VAT C&RT can still pay HMRCE the VAT charged on licences and reclaim the VAT paid on their purchases.

[Tony Dunkley]

 

Until you understand the difference between zero rated and exempt, explaining this will be impossible.

 

If you opt to have licences exempt from VAT, you cannot reclaim input tax.

 

If licences were zero rated, you could reclaim.

 

The current position;

 

1) is revenue positive for CRT

2) Makes no difference to what a boater pays

3) Assists hire companies.

 

The difference between VAT zero rated and VAT exempt, which I am well aware of, isn't pertinent to this particular matter.

 

For some inexplicable reason you're repeatedly talking about 'reclaiming input tax' on boat licence fees, . . . just exactly who do you think could possibly reclaim input tax on a boat licence fee, and who do you think pays the input tax on them ?

 

Can you elaborate on what you think input tax is, and which of the two parties to a transaction pays it ?

 

How would you describe the VAT that C&RT pays on contractor's Invoices, input or output [on C&RT's books] ?

Edited February 25, 2016 by Tony Dunkley

[RichardN]

 

Maybe there is some misunderstanding :

 

1) There is no question that licences are subject to VAT

2) C&RT can reclaim their VAT

3) Certificates of registration are not subject to VAT

4) Irrespective of Certificates of registration being exempt or zero rated, because of the vast majority of 'licences' being subject to VAT C&RT can still pay HMRCE the VAT charged on licences and reclaim the VAT paid on their purchases.

 

I don't think this is anything to do with exemption or zero rating.

 

I have not looked at this years paperwork but in past years we always got an invoice for our gold licence and in it there was a breakdown with the CRT portion being subject to VAT and the EA bit of our licence NOT being subject to VAT yet the EA manage to claim back the VAT they pay on building works as they have a special deal with George Osbourne but probably best not to remind him about it. Same piece of paper, two VAT regimes.

 

My memory may not be accurate but there was a big debate about this 12 or 13 years ago and BW as was chose to opt in for VAT on land and buildings as that gave them a fairly massive net tax reclaim - I see their briefing note talks of £20M. For the rivers only piece of paper I can remember there was an argument with HMRC (or was it Customs & Excise then?) who ruled that VAT applied, I can remember a rivers only piece of paper holder posting that they had even managed to talk to the relevant VAT inspector which is quite a feat but as I was having an HMRC audit at the time, I did think do you really want to bring yourself to their attention?

[Tony Dunkley]

 

I don't think this is anything to do with exemption or zero rating.

 

I have not looked at this years paperwork but in past years we always got an invoice for our gold licence and in it there was a breakdown with the CRT portion being subject to VAT and the EA bit of our licence NOT being subject to VAT yet the EA manage to claim back the VAT they pay on building works as they have a special deal with George Osbourne but probably best not to remind him about it. Same piece of paper, two VAT regimes.

 

My memory may not be accurate but there was a big debate about this 12 or 13 years ago and BW as was chose to opt in for VAT on land and buildings as that gave them a fairly massive net tax reclaim - I see their briefing note talks of £20M. For the rivers only piece of paper I can remember there was an argument with HMRC (or was it Customs & Excise then?) who ruled that VAT applied, I can remember a rivers only piece of paper holder posting that they had even managed to talk to the relevant VAT inspector which is quite a feat but as I was having an HMRC audit at the time, I did think do you really want to bring yourself to their attention?

 

All that may have been what BW said, but them saying it doesn't make it true, any more than you can believe anything that C&RT say.

All that was/is necessary, both then and now, in order for BW/C&RT and the EA to reclaim the [input] VAT on their outgoings on building and land, and anything else for that matter, is to be VAT registered. Then, come settlement time at the end of every VAT accounting period, if they had paid out more [input] VAT than they had collected [output] VAT on Licence fees and anything else they 'sold', they reclaim the difference.

Charging and collecting [output] VAT on boat licences has the effect of reducing the amount of [input] VAT that they can subsequently reclaim.

Edited February 25, 2016 by Tony Dunkley

[OldGoat]

If nobody challenges it - then the practice will continue.

However, challenging CaRT may be a waste of time, complaining to HMRC may indeed be a challenge too far - unless a number of folk get together and make a lot of noise.

I can't see that happening.

 

Life's a B***c, innit?

[Tony Dunkley]

If nobody challenges it - then the practice will continue.

However, challenging CaRT may be a waste of time, complaining to HMRC may indeed be a challenge too far - unless a number of folk get together and make a lot of noise.

I can't see that happening.

 

Life's a B***c, innit?

 

I would be interested to hear why you think so.

[NigelMoore]

. . . complaining to HMRC may indeed be a challenge too far -

 

 

It has been done, and done successfully. I had quite a bit of work come my way from John Everett of the London Tideway Harbour Company, by reason of his challenge over their demanding VAT on barges converted into houseboats.

 

Customs and Excise insisted that they were liable to VAT; he fought them, won, and because they took so long over paying the Court Costs Order, came away with a nice profit from the battle due to the accumulated statutory interest.

 

A serious risk though.

 

[mayalld]

 

The difference between VAT zero rated and VAT exempt, which I am well aware of, isn't pertinent to this particular matter.

 

For some inexplicable reason you're repeatedly talking about 'reclaiming input tax' on boat licence fees, . . . just exactly who do you think could possibly reclaim input tax on a boat licence fee, and who do you think pays the input tax on them ?

 

Can you elaborate on what you think input tax is, and which of the two parties to a transaction pays it ?

 

How would you describe the VAT that C&RT pays on contractor's Invoices, input or output [on C&RT's books] ?

 

I am not talking about reclaiming the input tax that CRT pays on the things that it buys.

 

The fundamental aspect of VAT is that it is paid on the VALUE ADDED

 

So, if I buy raw materials for £100, and pay VAT of £20 on them, and sell finished goods for £200, I have Added £100 to the value, and there is VAT of £20 to pay on that added value.

 

In practice, I charge VAT of £40, and reclaim the £20 that my supplier paid.

 

If what I sell is zero rated, I reclaim the VAT that was paid, but don't pay anything over.

 

Likewise if I buy at full VAT, and sell at 5% (very common with marinas buying electricity commercially and selling it domestically).

 

However, if what I sell isn't in the scope of VAT, I can't reclaim the VAT that it cost me to buy it.

[mayalld]

 

Maybe there is some misunderstanding :

 

1) There is no question that licences are subject to VAT

2) C&RT can reclaim their VAT

3) Certificates of registration are not subject to VAT

4) Irrespective of Certificates of registration being exempt or zero rated, because of the vast majority of 'licences' being subject to VAT C&RT can still pay HMRCE the VAT charged on licences and reclaim the VAT paid on their purchases.

 

Point 4 is just plain wrong.

 

VAT Notice 706 explains it in enormous detail.

 

Unless the amount of exempt supplies is very tiny indeed, then the fact that CRT makes a mixture of exempt and taxable supplies would lead to it being unable to recover all of the VAT that it paid on Purchases.

[Alan de Enfield]

 

 

 

However, if what I sell isn't in the scope of VAT, I can't reclaim the VAT that it cost me to buy it.

 

What would C&RTs 'costs' be that incurred VAT on issuing a licence (or even a registration certificate)

The paper and ink may incur VAT but its now DIY printing so they don't even have that.

[Alan de Enfield]

 

 

 

Unless the amount of exempt supplies is very tiny indeed, then the fact that CRT makes a mixture of exempt and taxable supplies would lead to it being unable to recover all of the VAT that it paid on Purchases.

 

Now we are starting to get somewhere :

If C&RT accepted that the issuing of Certificates was free of VAT (exempt or Zero rated) then the 'small' number of "River only Licences" (certificates) would indeed be a very small percentage indeed of both their income and expenditure.

 

I would presume (very dangerous) that they already have some VAT exempt income eg the DEFRA grants - so they probably already have the systems in place to make 'adjusted' declarations.

 

Edit to add - taken from accountants advisory.

 

Grant income can take many forms including private and government grants. The most important point to consider in regards to grant income, is whether the income really is a grant. The labelling of a payment to you as a grant does not make the income necessarily a grant, even income from a government department.

 

Grant income is income received by you (or your company) for which you do not have to provide anything in return. There may be a requirement to report back on your activities and you may only be able to spend the grant on certain expenditure, however this in itself does not stop the income being grant income.

Grant income is outside the scope of VAT, therefore no VAT is payable when you receive a grant. Care is needed as HMRC are particularly keen to ensure that income is not excluded from VAT merely on the basis of a label being applied to the income.

Assuming the grant is outside of the scope of VAT it is usually still possible to reclaim the VAT on the expenditure paid for from the grant. This VAT can be reclaimed (subject to being VAT registered and normal reclaim rules) if the expenditure relates to a VAT trade.

Edited February 26, 2016 by Alan de Enfield

[OldGoat]

 

I would be interested to hear why you think so.

Young Mr. Moore's comments below adds some weight to my comment

 

 

It has been done, and done successfully. I had quite a bit of work come my way from John Everett of the London Tideway Harbour Company, by reason of his challenge over their demanding VAT on barges converted into houseboats.

 

Customs and Excise insisted that they were liable to VAT; he fought them, won, and because they took so long over paying the Court Costs Order, came away with a nice profit from the battle due to the accumulated statutory interest.

 

A serious risk though.

 

 

I am of the opinion that unless there's a large amount of money at stake and you're prepared to risk a lot if you get nowhere - it will all end in tears.

HMRC are not interested in individual claims for 'small' amounts. In the current topic the only hope of getting some 'justice' is if there's some of class action process and that's a new idea in the UK. Getting folks to participate in class actions is also a challenge.

 

Does that make my comment more reasonable?

[Tony Dunkley]

 

I am not talking about reclaiming the input tax that CRT pays on the things that it buys.

 

The fundamental aspect of VAT is that it is paid on the VALUE ADDED

 

So, if I buy raw materials for £100, and pay VAT of £20 on them, and sell finished goods for £200, I have Added £100 to the value, and there is VAT of £20 to pay on that added value.

 

In practice, I charge VAT of £40, and reclaim the £20 that my supplier paid.

 

If what I sell is zero rated, I reclaim the VAT that was paid, but don't pay anything over.

 

Likewise if I buy at full VAT, and sell at 5% (very common with marinas buying electricity commercially and selling it domestically).

 

However, if what I sell isn't in the scope of VAT, I can't reclaim the VAT that it cost me to buy it.

 

I wanted some answers to the questions I asked you, . . . not a few lines of elementary arithmetic, or an explanation of how VAT is applied to something other than the subject in hand.

[Tony Dunkley]

Young Mr. Moore's comments below adds some weight to my comment

 

 

I am of the opinion that unless there's a large amount of money at stake and you're prepared to risk a lot if you get nowhere - it will all end in tears.

HMRC are not interested in individual claims for 'small' amounts. In the current topic the only hope of getting some 'justice' is if there's some of class action process and that's a new idea in the UK. Getting folks to participate in class actions is also a challenge.

 

Does that make my comment more reasonable?

 

I don't see how claims arising out of disputes with HMRC are relevant to boaters reclaiming unlawfully collected VAT from C&RT, and subsequently alerting and involving HMRC if no refunds are forthcoming.

[mayalld]

 

What would C&RTs 'costs' be that incurred VAT on issuing a licence (or even a registration certificate)

The paper and ink may incur VAT but its now DIY printing so they don't even have that.

 

CRT sell a service (the right to keep a boat on their waterways).

 

The cost of providing that service is the costs incurred in maintaining a navigable system.

 

They have to spend x million pounds a year on the waterways, in order to actually have a product to sell.

 

So, if all licences and registrations are VATable, all the VAT they pay on supplies and on paying sub-contractors is reclaimable.

 

If Registrations are exempt from VAT, then some of their expenditure is on providing an exempt supply, and they cannot reclaim VAT on their costs in that proportion.

[erivers]

 

CRT sell a service (the right to keep a boat on their waterways).

 

Not true in the case of rivers. The 'right' is enshrined in common law or statute and often both.

[mayalld]

Not true in the case of rivers. The 'right' is enshrined in common law or statute and often both.

 

The right to keep a boat in the main navigable channel of a scheduled river requires a registration

[erivers]

 

If Registrations are exempt from VAT, then some of their expenditure is on providing an exempt supply, and they cannot reclaim VAT on their costs in that proportion.

TV licences are exempt from VAT. Are we to believe that the BBC does not reclaim VAT on its costs?

 

One way or another, boaters are being conned here by being made to pay 20% tax on river-only registrations which has no basis in law. If the 'tax' ends up with CRT then of course it may help their stretched finances but that can be no justification for taking it under false pretences.

[NigelMoore]

 

The right to keep a boat in the main navigable channel of a scheduled river requires a registration

 

A little necessary pedanticism required here, addressing the whole genesis of this [/&other] element/s of the debate:

 

EXERCISING the right to keep and use a boat in the main navigable channel of a scheduled river requires a registration. The registration does not confer the right, unlike the licence required for non-PRN waterways.

 

Likewise: exercising the right to keep and use a boat in the main navigable channel of a scheduled river requires compliance with all the relevant byelaws. Compliance with the relevant byelaws does not confer the right.

 

Neither registration, nor compliance with byelaws, grants a licence to keep and use the boat on the public navigable rivers. They are simply legislated conditions under which the existing right is to be exercised, breach of those conditions being punishable by specific legislated penalties; breach of the conditions does not remove the right - hence that part of the argument in 'Wingfield' and 'Ravenscroft' that s.8 powers are inapplicable in the circumstances.